MEMORANDUM OPINION

This matter is before the court on the motion of the defendants, Lola Bettye Sloan,
Jimmie Sloan, Ned T. Sloan, Margaret Sloan, Bruce R. Sloan, and John Sloan (hereinafter
the Sloans) to alter, amend, and vacate the findings of fact and conclusions
of law in the court's Memorandum Opinion of September 12, 1996, and to amend or vacate the
courts accompanying order of September 12, 1996.

The courts memorandum opinion and order of September 12, 1996 grants
injunctive relief on the complaint of Shamrock Coal Company, Inc. (hereinafter
Shamrock) filed July 20, 1995.The
complaint alleges that in violation of a preliminary injunction entered by this court on
June 18, 1986, the Sloans on October 16, 1989, filed a civil action in the Jefferson
Circuit Court, No. 89-CI-07804, seeking damages from Shamrock for trespass and removal of
coal from premises mined by Shamrock pursuant to an Option to Lease Agreement entered into
with approval of the court by Shamrock and the trustee in bankruptcy of the debtor,
Becknell & Crace Coal Company, Inc.

The courts memorandum opinion and order of September 12, 1996 are based on
facts adduced at an evidentiary hearing held on May 30, 1996 on Shamrock's motion for a
preliminary injunction enjoining the Sloans from proceeding further in their civil action
against Shamrock in the Jefferson Circuit Court.

The memorandum opinion of September 12, 1996 disposes of arguments heard by the
court on September 20, 1995 on the motion of the Sloans requesting that this court dismiss
the complaint herein or, in the alternative, abstain from hearing the complaint.

As previously noted the complaint was filed July 20, 1995.On August 28, 1995 the Sloans filed their motion
to dismiss the complaint on four grounds as follows:

1.The court lacks subject matter
jurisdiction;

2.The court lacks jurisdiction over
the Sloans;

3.The court is the improper venue;
and

4.The complaint fails to state a
claim upon which relief can be granted.

This motion of the Sloans was not noticed for hearing.

Under the local rules of the Bankruptcy Court in effect at the time, the court
heard motions in adversary proceedings on the first and third Wednesday of each month.

On its own motion, by order entered on August 29, 1995, the court set September 20,
1995, the third Wednesday in September, as the date for hearing the motion of the Sloans
to dismiss the complaint or alternatively to abstain from hearing this matter.

Shamrocks complaint names the chapter 7 trustee as a defendant and seeks
indemnification from the trustee to the extent Shamrock might be held liable to the
Sloans.The trustee noticed his motion to
dismiss the complaint as to the trustee for hearing on September 20, 1995 as well.The court's Memorandum Opinion of September 12,
1996, also disposes of this motion of the trustee.

Following the hearing on September 20, 1995, counsel for the Sloans was accorded
the opportunity to file a supplemental memorandum in support of the Sloans motion to
dismiss or abstain.An agreed order
permitting the filing of the supplemental memorandum was entered October 26, 1995, and the
supplemental memorandum was filed on that date.

Because the complaint filed by the Sloans in the Jefferson Circuit court was not
part of the record the court concluded the record was incomplete.On January 5, 1996 the court ordered the parties
to file in this proceeding a certified copy of the record of the action of the Jefferson
Circuit Court.The certified copy of the
record of the action in the Jefferson Circuit Court was filed herein by counsel for the
plaintiff on January 29, 1996, and was supplemented on March 22, 1996 and April 2, 1996.

The record of the state court proceeding as supplemented reveals that on March 18,
1996 the judge presiding over the action in the Jefferson Circuit Court granted summary
judgment in favor of Shamrock and dismissed all claims of the Sloans in that action.The state court opinion recognized that the
trustee in bankruptcy, standing the shoes of the debtor, Becknell & Crace Coal
Company, Inc., had a fee simple interest in the coal underlying the Sloan properties and,
by authority of old title 11 U.S.C. § 110, was free to dispose of the debtors
interest in the coal in any way the trustee chose, including entry into the Option to
Lease Agreement with Shamrock.

The Sloans filed in the state court action a motion requesting that court to vacate
its order of March 18, 1996.

With the record thus supplemented the court set this matter for a status conference
on May 23, 1996.On motion of counsel for the
Sloans for cause shown, the status conference was reset for May 30, 1996, the same date as
the hearing on Shamrocks motion for a preliminary injunction as hereinafter
discussed.

Shamrocks motion for a preliminary injunction was filed April 23, 1996 and
was initially noticed for hearing on May 15, 1996, but was reset for May 30, 1996.

On May 14, 1996 and May 28, 1996, counsel for Shamrock further supplemented the
record of the Jefferson Circuit Court action indicating that on May 9, 1996 the Sloans
filed in the state court action a motion asking that Shamrock be restrained from
requesting injunctive relief in this court.That
motion was overruled by the presiding judge of the Jefferson Circuit Court by an opinion
and order entered May 20, 1996.

The evidentiary hearing on Shamrocks motion for a preliminary injunction was
held on May 30, 1996.The order of May 15,
1996 rescheduling the hearing from that date to May 30, 1996 states that in not objecting
to the continuance the Sloans were not submitting to or waiving their objection to the
jurisdiction of the bankruptcy court.

The transcript of the May 30, 1996 evidentiary hearing was filed with the court on
June 7, 1996.

On August 27, 1996, while Shamrocks motion for a preliminary injunction was
under consideration by the court, the Sloans, by counsel, filed in the U.S. District Court
for this district a Petition for Extraordinary Writ or Motion for Withdrawal of Reference,
Case No. 96-340, London Division, styled Tony Sloan,
et al., Petitioners v. Joe Lee, Referee in Bankruptcy,[1] and Shamrock Coal Company.

The undersigned was not served with a copy of the "petition" to the U.S.
District Court or a summons with respect thereto and was unaware of the
petition when the memorandum opinion and order of September 12, 1996 were
entered.

The filing of the Petition for Extraordinary Writ or Motion for Withdrawal of
Reference with the U.S. District Court did not operate to deprive the bankruptcy court of
jurisdiction of this adversary proceeding.Rule
5011(c), Federal Rules of Bankruptcy Procedure.Consequently,
the memorandum opinion and order of September 12, 1996 were unaffected by the filing of
the withdrawal motion in the district court.

On September 18, 1996, after entry of the memorandum opinion and order of September
12, 1996, the Sloans, by counsel, filed in the U.S. District Court action a motion to stay
proceedings and the finality of orders entered by the bankruptcy court in this bankruptcy
proceeding.The Sloans alleged they would be
irreparably harmed unless the orders of this court were stayed.Rule 5011(c) directs that such a motion ordinarily
shall be presented first to the bankruptcy judge.

On September 20, 1996 the U.S. District Court entered an order denying the motion
of the Sloans for an extraordinary writ or withdrawal of reference, or for a stay.

On September 23, 1996, the Sloans, by counsel, timely filed in this adversary
proceeding their Motion to Alter, Amend, and Vacate Findings of Facts (sic) and
Conclusions of Law and to Amend or Vacate the Courts Order of September 12, 1996.Rules 7052, 9006(a), and 9023(e), Federal Rules of
Bankruptcy Procedure.This timely motion
operated to extend the time to appeal from the order of September 12, 1996.Rule 8002(b), Federal Rules of Bankruptcy
Procedure.Thus, the allegations of the
Sloans in the Petition for Extraordinary Relief and Motion for Withdrawal of Reference and
Motion for Stay that they would be irreparably harmed unless such relief were granted
appear to have been an exaggeration.

Nevertheless, the Sloans appealed to the U.S. Court of Appeals for this circuit
from Judge Coffmans order of September 20, 1996, denying their Petition for
Extraordinary Relief and Motion for Stay of Proceedings and Finality and Enforcement of
Orders, and dismissing their action in the U.S. District Court.Approximately one year later the Sloans and
Shamrock stipulated to dismissal of the appeal and the appeal was dismissed by order of
the Court of Appeals entered on September 16, 1997.

Meanwhile, on September 23, 1996, Shamrock, by counsel, filed a motion for an order
requiring the Sloans, and their counsel of record, to reimburse Shamrock for all costs and
attorney fees incurred by Shamrock in defending various actions filed by the Sloans
against Shamrock in the Clinton Circuit Court, the Jefferson Circuit Court, the Bankruptcy
Court, and the U.S. District Court, insofar as those actions relate to the Option to Lease
Agreement entered into between Shamrock and the trustee, with the approval of the
bankruptcy court.This request for
reimbursement was filed on the same September 23, 1996 date as the Sloans Motion to
Alter, Amend, and Vacate Findings of Facts (sic) and Conclusions of Law and to Amend or
Vacate the Courts Order of September 12, 1996.

A hearing was held on both of these
motions on May 21, 1997.

At the hearing on May 21, 1997, for the reasons stated by the court as will appear
of record in the transcript of the hearing, the court orally overruled the motion of the
Sloans to alter, amend, and vacate the memorandum opinion and order of September 12, 1996.A final and appealable order was not entered at
that time because the court was of the opinion that as a matter of judicial economy there
should be a final and appealable ruling as well on the question of sanctions against the
Sloans and their counsel in the form of a judgment requiring the Soans and their counsel
to reimburse Shamrock for attorney fees and expenses incurred by Shamrock.

At the hearing on May 21, 1997 the Sloans and their counsel requested an
evidentiary hearing on the extent to which the attorney fees and expenses, for which
Shamrock was requesting reimbursement, were incurred in defense of civil actions commenced
by the Sloans in violation of the injunction entered by this court on June 18, 1986.The court allowed 60 days for counsel for Shamrock
to itemize their fee requests and for the parties to prepare for an evidentiary hearing on
Shamrock's request for reimbursement of attorney fees and expenses, and on any objections
of the Sloans and their counsel thereto.

After discovery, pursuant to order of the court entered on August 5, 1997, a
hearing was held on September 25, 1997 on the renewed motion of Shamrock for reimbursement
of attorney fees and expenses. Shamrock seeks reimbursement for fees and expenses paid to
attorneys as follows in defense of litigation initiated in behalf of the Sloans in
violation of the injunctive orders of the bankruptcy court:Charles Adams, $20,922.00; Jack Ballantine $29,154.00; and John T. Hamilton
$24,198.00, for a total of $74,274.00.Insofar
as the court can determine from the supplemental objection of the Sloans and their counsel
filed on September 24, 1997, the day prior to the hearing, the Sloans and counsel for the
Sloans make no specific objection to the amount of the fees and costs for which Shamrock
requests reimbursement.Rather their
objections are procedural based on alleged lack of notice of the legal basis for the
imposition of sanctions, lack of due process, and the fact the complaint of Shamrock
initiating this adversary proceeding does not seek any sanctions or pecuniary damages
against the Sloans or counsel for the Sloans.

Sanctions are being imposed on the courts own motion.The courts statement as appears of record in
the transcript of the hearing held May 30, 1996, makes this clear and also makes clear the
legal basis for the sanctions.

I

The Sloans complain that their motion to dismiss the complaint in this adversary
proceeding for lack of subject matter jurisdiction, lack of personal jurisdiction over the
Sloans, improper venue, and failure to state a claim upon which relief can be granted was
not ruled on by the court prior to entry of the order of September 12, 1996 granting the
injunctive relief requested by Shamrock.The
Sloans argue they were thereby denied due process by reason of the fact they were not
afforded an opportunity to file an answer to the complaint and engage in discovery prior
to the hearing on Shamrocks motion for a preliminary injunction.

The complaint alleges the action of the Sloans against Shamrock in the Jefferson
Circuit Court was commenced in violation of an extant preliminary injunction entered by
this court on June 18, 1986.The injunction
is a matter of record in these proceedings.The
action of the Jefferson Circuit Court is a matter of record in that court and a copy
thereof has been made a part of the record in this adversary proceeding.There was really nothing to discover except with
respect to the conduct of the Sloans, of which they were fully aware.

Counsel for the Sloans makes much of the fact that Shamrock had ceased mining on
the property in 1988 prior to commencement of the action in their behalf in the Jefferson
Circuit Court, a fact which is not disputed.However,
it is also true that as mining progressed periodic royalty payments were tendered to the
Sloans and that these payments, together with prior payments, equaled $1,000,000, upon
payment of which the debtor and the trustee were to become fee simple owners of the coal
underlying the Sloan properties.The fact the
Sloans had refused to accept these payments did not give them the right to contest the
amount owed on the Lease-Purchase Agreement in a court other than the bankruptcy court.Moreover, as the record in this matter indicates,
Shamrock was still obligated to perform reclamation work on the Sloan properties pursuant
to the terms of the lease agreement between the trustee and Shamrock.Obviously the trustee and Shamrock were still in
possession of the Sloan properties and the bankruptcy court still had exclusive
jurisdiction over those properties when the action in the Jefferson Circuit Court was
commenced.And, without naming the trustee as
a defendant, the Sloans were seeking damages for the mining of coal in which the trustee
held the predominant if not the entire interest.

The Sloans denial of due process claims ring hollow in view of their efforts
to obtain determinations in the Clinton and Jefferson Circuit Courts with respect to the
leasehold properties without naming the trustee in bankruptcy a defendant in those actions
despite the fact that under the law of this case the trustee held a fee simple interest in
the coal underlying the properties and retained the right to assume the lease of the
surface properties and to utilize such surface for the purpose of mining the coal
underlying the properties.

By these actions and by their failure to apprise Shamrock and the undersigned
bankruptcy judge of their hidden purpose in obtaining the order of the Court of Appeals
adopting the Settlement Agreement and disposing of the appeals pending in that court,
which appeals previously had been dismissed, the Sloans and their counsel have
demonstrated disdain for the concept of due process of law.

This court remains respectful of the requirements of due process of law and is
satisfied the Sloans have not in any manner been denied due process of law in this
adversary proceeding.

The court dealt extensively with the question of subject matter jurisdiction in its
memorandum opinion of September 12, 1996.The
court concluded it had exclusive jurisdiction over the premises leased by the debtor,
Becknell and Crace Coal Company, Inc., from the Sloans, and by virtue of that fact had
exclusive jurisdiction to adjudicate the rights of any entity, including the Sloans,
claiming an interest in property of the debtor, wherever located.

The assertion the court does not have personal jurisdiction over the Sloans is
wrong for several reasons.

As far back in time as August 21, 1972, early on in the Becknell and Crace Coal
Company case, the Sloans, by counsel, petitioned the court for an order rejecting the
Lease-Purchase Agreement dated January 22, 1970, between the Sloans and the debtor,
pursuant to which the debtor was conducting mining operations on the Sloan properties
covered by the agreement.In making this
request the Sloans acknowledged the courts jurisdiction over the property and
submitted themselves personally to the jurisdiction of the court.

On September 6, 1972, the Sloans, by counsel, filed a memorandum brief in support
of their petition for rejection of the Lease-Purchase Agreement.In the memorandum the Sloans stated
[i]ncluding the year 1972, the future payments due the Sloans from the Debtor,
amount to $700,000, plus certain wheelage charges.Thus, the Sloans, by timely filing this informal claim in the case submitted
themselves personally to the jurisdiction of the court for the purpose of adjudicating
their claim.It was this litigation that
resulted in the ruling by the bankruptcy court that the trustee as successor in interest
of the debtor owned a fee simple interest in the coal underlying the Sloan properties, a
ruling affirmed by the court of appeals and by which the Sloans are personally bound.

According to the certificate of service in this adversary proceeding a summons and
copy of the complaint and amended complaint were served on each of the defendants Sloan by
first class mail on July 21, 1995 and July 27, 1995, in conformity with Rule 7004(b)(1) of
the Federal Rules of Bankruptcy Procedure.There
has been no contention this service was somehow defective.Personal jurisdiction over the Sloans in this adversary proceeding seems obvious.

Finally, the Sloans were disbursed funds by the trustee in bankruptcy in accordance
with the settlement agreement entered into by the parties, which settlement agreement the
court determined should be set aside and was set aside by the courts order of
September 12, 1996.Under sections 2(a)(2)
and 57(l) of the Bankruptcy Act, 11 U.S.C. §§ 11a(2) and 57(l), the court has summary
jurisdiction over the recovery of any payment erroneously made on a claim.Thus, the court has personal jurisdiction over the
Sloans for this purpose as well.

Clearly the complaint of Shamrock states a claim upon which relief can be granted.The Sloans and their counsel caused the action in
the Jefferson Circuit Court to be filed on October 16, 1989, not only in violation of the
orders of this court entered on May 19, 1986, June 16, 1986, and June 18, 1986, but also
in violation of Judge Silers memorandum opinion and order of March 15, 1988, which
concluded the foregoing orders of the bankruptcy court were consistent with the ruling and
mandate of the Sixth Circuit in In re Becknell &
Crace Coal Company, Inc., 761 F.2d 319 (6th Cir. 1985), cert. denied, 106 S.Ct. 528,
rehearing denied 106 S.Ct. 901.Judge Siler
ruled the bankruptcy court had authority to enforce its orders through injunctions.[2]

This courts order of May 19, 1986 (paragraph 3) was entered following a
hearing held on May 7, 1986, on the motion of the Sloans for an order permitting them to
file in state court an action against the debtor, Becknell & Crace Coal Company, to
quiet title for the purpose of obtaining a declaratory judgment determining whether the
debtor acquired a fee simple interest in the coal underlying the Sloan properties.This motion was filed after the Sixth Circuit had
decided the In re Becknell & Crace Coal
Company, Inc. case, 761 F.2d 319 (6th Cir. 1985), cert. denied 106 S.Ct. 528,
rehearing denied 106 S.Ct. 901, in which that court held under the terms of the
Lease-Purchase Agreement between the debtor and the Sloans the debtor acquired a fee
simple interest in the coal.In an earlier
motion filed April 8, 1986, also after the foregoing Sixth Circuit decision, the Sloans
alleged the bankruptcy court did not have jurisdiction to try title to Kentucky land,
where title does not arise from bankruptcy proceedings.The courts order of May 19, 1986 clearly denied the Sloans request to
seek a redetermination in state court of their interest in the coal underlying the surface
of properties leased to the debtor.Despite
the foregoing rulings by the Bankruptcy Court, the District Court, and the Court of
Appeals, the Sloans filed actions in the Clinton and Jefferson Circuit Courts which
clearly were intended to subvert the rulings of the federal courts.

The Sloans did not name the trustee in bankruptcy as a defendant in the Clinton or
Jefferson Circuit Court actions.

In Count I of their
complaint in the Jefferson Circuit Court the Sloans alleged:

14.On or after June 11, 1986, the
Defendant (Shamrock), without the permission of the Plaintiff and over its objections, did
enter upon the subject property to commence exploration activities for the purpose of
mining.Subsequent to that date, said
Defendant did explore the property, cause trees and vegetation to be removed therefrom,
constructed roads and ultimately did cause coal to be removed by the deep mining method.

15.All of the aforementioned
activities of the Defendant did occur prior to the Trustee having assumed or any Court
granting the Trustee the authority to assume the Lease-Purchase Agreement, Exhibit
A herein.

16.The actions of the Defendant
complained of hereinabove constitute a trespass to the subject real property or a waste to
the same.As a direct and proximate result of
the actions of the Defendant, the Plaintiff has lost the use of its property as well as to
have the same suffer a detriment to its economic value.

Obviously, in making this allegation the Sloans and their counsel were aware of the
Findings of Fact and Conclusions of Law and Judgment entered by this court on June 18,
1986, which after trial and after hearing the objections of the Sloans, authorized the
trustee to enter into the Option to Lease Agreement with Shamrock, authorized the trustee
through Shamrock to enter onto the premises and conduct exploration and prospecting
pursuant to the terms of the Option to Lease Agreement, and allowed the trustee 100 days
from the date the judgment became final within which to assume or reject the
Lease-Purchase Agreement between the Sloans and the debtor.The Sloans and their counsel were necessarily aware as well that the January 22,
1970 Lease-Purchase Agreement between the Sloans and the debtor, permitted the trustee in
bankruptcy, as successor in interest to the debtor, to use so much of the surface of the
leasehold as may be reasonably necessary in searching and exploring for coal, to dig, mine
and remove coal by whatever means practical, including strip mining, to erect buildings
thereon, and to dig air shafts.The
Lease-Purchase Agreement also granted rights of way for necessary roads, and even
permitted the deposit of waste on the property.

The Lease-Purchase Agreement permitted assignment of the lease on the terms
conforming to the agreement.

It is worth noting that while pursuing their action for damages against Shamrock in
the Jefferson Circuit Court based on allegations that Shamrock was unlawfully mining coal
from their properties because the trustee had not assumed the Lease-Purchase Agreement
between the Sloans and the debtor, counsel for the Sloans was at the same time arguing in
an appeal to the District Court and a later appeal to the Court of Appeals that the
trustee had, by his conduct, assumed the Lease-Purchase Agreement.See October 25, 1991, Memorandum Opinion by Judge
Unthank in Civil Actions Nos. 86-227 and 91-157 U.S. Dist. Ct., E.D. Ky., London.See also the brief of counsel for the Sloans filed
in the Sixth Circuit Court of Appeals in appeals nos. 91-6462; 91-6463; and 91-6464 in
March, 1992, at page 12.

Against this background, the action filed by the Sloans and their counsel in the
Jefferson Circuit court smacks of an attempt to shakedown Shamrock.

The order of this court of September 12, 1996 directing the Sloans and counsel for
the Sloans to dismiss the action in the Jefferson Circuit Court does not deprive them of
due process.Their claim to ownership of the
coal underlying their properties has been fully litigated in the federal courts all the
way to the U.S. Supreme Court, and, in violation of the injunctive orders of this court,
was re-litigated at the trial court level in the Jefferson Circuit Court.

To the extent the Sloans assert a claim based on their contention the mining
methods of Shamrock left unrecoverable a substantial amount of unmined coal and thereby
rendered such coal unmerchantable, such claim, which arises in this bankruptcy case, can
be asserted in an adversary proceeding in this court.By virtue of the courts order of September 12, 1996 setting aside the
settlement agreement between the parties as having been obtained by withholding
information from the court, the court has and retains exclusive jurisdiction over the
property in question.The settlement
agreement did not, in any respect, vitiate the holding of the Sixth Circuit in In re: Becknell & Crace Coal Company, Inc.,
761 F.2d 319 (1985) recognizing the fee simple interest of the trustee in the coal
underlying the Sloan properties.The trustee
still has that interest until the court determines otherwise.

In the cases cited by counsel for the Sloans the litigants rights previously
had not been adjudicated by a court of competent jurisdiction and the litigants had not
habitually disregarded orders of the court vested with jurisdiction of their claims.

II

While the court previously has written extensively about the conduct of the Sloans
with respect to the actions commenced by them in the Clinton and Jefferson Circuit Courts
in violation of orders of this court, reiteration is relevant in establishing the conduct
of the Sloans and their counsel, as bases for sanctions.

This courts order of May 19, 1986 overruled the motion of the Sloans, by
counsel, for leave to file a quiet title action in state court reasserting their claim of
ownership of the coal underlying their properties.This
courts memorandum opinion and order of June 11, 1986 authorized the trustee to enter
into the Option to Lease Agreement with Shamrock, and through Shamrock to prospect for
coal underlying the premises leased from the Sloans.Despite these orders, entered after hearings to which the Sloans were parties and
in which their attorney participated, the Sloans, by counsel, on June 14, 1986 filed an
action in the Clinton Circuit Court, Civil Action No. 86-CI-080, against Shamrock and
Charlotte Baldwin, Secretary of the Kentucky Natural Resources and Environmental
Protection Cabinet, seeking a temporary and permanent injunction restraining and enjoining
the Secretary from permitting and Shamrock from conducting exploration for coal on the
Sloan properties.Neither the debtor nor the
trustee were named parties to the action, but the action obviously was a collateral attack
on the prior order of the bankruptcy court authorizing such exploration.The complaint alleged the Sloans were the
owners of the minerals underlying the property, but this issue is presently being
litigated in the United States Bankruptcy Court for the Eastern District of Kentucky, and
subsequent Federal Courts which may exercise appellate jurisdiction over the actions after
United States Bankruptcy Court.The
complaint did not acknowledge the Sloans had exhausted their rights of appeal on the issue
of ownership of the minerals underlying the properties, or the debtors and the
trustees rights under the Lease-Purchase Agreement to occupy and explore for coal on
the property.

On June 16, 1986 this court heard and granted the trustees motion for a
temporary restraining order enjoining further proceedings by the Sloans in the Clinton
Circuit Court action, and further enjoining the Sloans, their attorneys, agents and
employees from interfering with the activities of the trustee or Shamrock, or their agents
or attorneys, in exploring for coal on the Sloan properties in accordance with the
judgment of this court.Following an
evidentiary hearing on June 18, 1986, this court entered a preliminary injunction broader
in scope than the temporary restraining order.The
Sloans were enjoined 

from proceeding in the Clinton Circuit Court with that certain action pending
against Shamrock and others, being Civil Action No. 86-CI-080, oranyotheractioninanyKentuckycourttoenjoinorotherwiseinterferewiththeuseofthepropertybythetrusteeorShamrockCoalCompanyor
inanymannerattemptingtointerferewithordefeatexplorationofsuch propertyundertermsoftheordersofthiscourt.[underscoring supplied]

Subsequently, on December 9, 1986, the Sloans filed two additional complaints in
the Clinton Circuit Court, Civil Action No. 86-CI-175, against Everett Neal and Flonnie
Neal, his wife, and Civil Action No. 86-CI-176 against Kermit Vitatoe and Ethel Vitatoe,
his wife.

The Neals and the Vitatoes by deeds dated March 2, 1970 and March 5, 1970,
respectively, had conveyed to Becknell & Crace Coal Company, Inc. 60-foot wide
easements or rights-of-way across their properties, for use by Becknell & Crace, its
successors and assigns, agents, servants and employees and persons for the advantage of
Becknell & Crace, to travel freely, pass and repass with vehicles, trucks, tractors
and equipment of all descriptions.

Thereafter, on February 21, 1970 Becknell & Crace conveyed its interests in
these rights-of-way to the Sloans, reserving to Becknell & Crace the full and free use
of the real estate conveyed so long as Becknell & Crace continued to operate or
maintain valid that certain Lease-Purchase Agreement between Becknell & Crace and the
Sloans, but upon termination thereof, this conveyance to be unconditional to the Sloans.

The conveyances to the Sloans of Becknell & Craces interest in these
easements or rights-of-way was consistent with, although premature, under the terms of the
Lease-Purchase Agreement dated January 22, 1970.The
Lease-Purchase Agreement required such conveyances to be made only upon termination of the
agreement.See pgs. 13-14 of the
Lease-Purchase Agreement.But, as noted, the
deeds of February 21, 1970 conveying to the Sloans the interest of Becknell & Crace in
these rights-of-way reserved to Becknell & Crace the right to continue to use the
rights-of-way so long as the Lease-Purchase Agreement of January 22, 1970 remained valid.In its opinion of May 8, 1985, 761 F.2d 319, cert.
denied Dec. 2, 1985, 106 S. Ct. 528, rehearing den. Jan. 27, 1986, 106 S. Ct. 901, the
Sixth Circuit unequivocally decided that the Lease-Purchase Agreement remained valid and
that the trustee must be afforded an opportunity to assume the agreement.

Against this background the Sloans did not name the trustee in bankruptcy or
Becknell & Crace Coal Company as defendants in their actions in the Clinton Circuit
Court against the Neals and the Vitatoes, although the trustee and the bankruptcy estate
under his administration clearly retained an interest in the rights-of-way in question and
the bankruptcy court had jurisdiction over the property by virtue of the debtors and
the trustees interest therein.

In their actions in the Clinton Circuit Court against the Neals and the Vitatoes
the Sloans alleged they hold a fee simple interest in the rights-of-way, although none of
the deeds of easement from the Neals and Vitatoes to Becknell & Crace or from Becknell
& Crace to the Sloans purported to be fee simple conveyances.In addition to requesting a judgment declaring
them to be the fee simple owner of the rights-of-way properties, the Sloans sought actual
and punitive damages from the defendants for claiming ownership of the property.

This attempt by the Sloans to sequester rights-of-way in which Becknell & Crace
retained an interest and was entitled to use, is but another example of the continued
disregard of the jurisdiction of the federal courts by the Sloans during the course of
administration of the estate of the debtor in this bankruptcy case.

The orders of the bankruptcy court likewise were ignored by the Sloans and their
counsel herein in communications with agents of Shamrock and the Commonwealth of Kentucky
Natural Resources and Environmental Protection Cabinet protesting the permit issued to
Shamrock to conduct exploration of the leasehold interest in the properties held by the
bankruptcy trustee.The Lease-Purchase
Agreement of January 22, 1970, under which Becknell & Crace and the trustee in
bankruptcy occupied the Sloan properties specifically granted to Becknell & Crace

its successors and/or assigns, the right and license to enter upon the premises
hereinabove described at all times, and to use the surface thereof as may be reasonably
necessary in searching and exploring for coal and determining the thickness and depth of
the coal and for sinking of shafts and air shafts and for the deposit of waste materials
from said shafts; also the right to dig, mine and remove said coal therefrom by whatever
means deemed practical by [Becknell & Crace], including strip mining methods, deep
mining method, or auger mining method, together with all and singular the rights,
privileges, licenses and easements necessary, instant, or in any manner appertaining to
the proper prosecution of the business of mining and removing coal, and with respect to
auger mining it is agreed that at approximately 1500 foot intervals, a 300 foot block of
coal shall be left in place to be mutually agreed upon by the parties, unless state or
federal laws require said block to be left at closer intervals.Also the rights-of-way for all necessary roads and
railroads over and under said premises, and the right to use said roads and railroads and
underground entries and openings on said premises for the purpose of transportation of
coal; and the right to occupy so much of the surface of said premises as may be reasonably
necessary for the storing of said coal, and depositing the refuse therefrom, and the right
to erect on said premises such buildings, structures and fixtures as may be necessary or
instant to the proper prosecution of the business of coal mining.

See
Lease-Purchase Agreement, pgs. 4-5.

The Lease-Purchase Agreement also gave Becknell & Crace Coal Company, Inc. and
the trustee as successor in interest to the debtor the right to sublease or assign
its rights herein, but such sublease or assignment shall be subject to the same terms,
conditions, covenants and stipulations as are herein provided."See Lease-Purchase Agreement, pgs. 10-11,
¶ 9d). There was no requirement that the Sloans approve a sublease or sublessee.

The Option to Lease Agreement which the trustee was permitted to enter into with
Shamrock provided that Shamrock shall have the right to prospect for coal upon the
premises by core drilling, exposing of outcroppings by bulldozer or by any feasible
means of determining the extent of coal deposits lying beneath the surface upon said
premises.In the event that said option is
not exercised, optionee agrees and covenants that it will restore any openings which it
has made and will seed or otherwise reclaim the area in accordance with acceptable
practices immediately following the completion of prospecting.See Option to Lease Agreement, ¶ 2.

When Shamrock exercised the option to lease the premises, the coal lease agreement
entered into between the trustee and Shamrock provided:

Lessor grants unto Lessee the right to enter upon the premises described above and
to remove all coal by and (sic) process of removal recognized in the mining industry and
to construct, operate and maintain upon the premises roadways, haulways, conveyors, power
and telephone lines, water pipelines, transformer stations, settling ponds, drainage
ditches, bulk storage facilities, buildings or other structures, facilities and equipment
as the Lessee shall determine necessary or expedient in connection with the mining
operation on said premises. Lessee agrees that it will mine and remove said coal in
conformity with the laws of the Commonwealth of Kentucky and of the Unites (sic) States
and in accordance with good mining practices.

See Coal Lease, ¶ 1.

Obviously, Shamrock lawfully mined the Sloan properties with the approval of this
court.The Sloans and their counsel could
not in good faith have thought otherwise when they filed their action in the Jefferson
Circuit Court seeking damages from Shamrock for trespass and removal of coal from the
Sloan properties.

As noted in previous opinions of this court in Adversary Proceeding No. 14, trial
on the trustees complaint seeking approval to enter into the Option to Lease
Agreement with Shamrock was, at the request of the Sloans, stayed by the Sixth Circuit
pending resolution of the appeal then pending from the decision of this court holding that
under the Lease-Purchase Agreement of January 22, 1970 the debtor and the trustee, as
successor in interest to the debtor, owned a fee simple interest in the coal underlying
the Sloan properties, a holding with which the Sixth Circuit agreed.Once the Sloans had exhausted their right of
appeal in that matter when the U.S. Supreme Court denied certiorari and a rehearing on the
denial of certiorari, the stay was terminated by order of Judge Siler entered on March 13,
1986.

On April 3, 1986 counsel for the trustee moved the court for a trial on the
trustees complaint, as amended, for an order allowing the trustee to enter into the
Option to Lease Agreement with Shamrock.

On April 8, 1986 the Sloans, by counsel, filed objections to the motion to set a
trial date and a motion to dismiss that adversary proceeding on various grounds, asserting
that under their interpretation of the opinion of the Sixth Circuit the trustee has no
further interest in the coal or the lands which are the subject of this action.

On April 11, 1986, the court entered an order setting this matter for trial on May
19, 1986.

On April 23, 1986, the Sloans, by counsel, filed additional motions which were
noticed for hearing on May 7, 1986.

These motions were overruled orally by the court at the hearing on May 7, 1986 and
by order entered on May 19, 1986, the date previously set for trial.

On May 19, 1986, preceding trial, the Sloans, by counsel, filed a motion to compel
discovery from the trustee and a motion to continue the trial.These motions were overruled by the court at trial
and by orders entered on June 16, 1986.

On June 2, 1986 the Sloans, by counsel, filed a motion asking the undersigned to
recuse himself because of rulings made by the court at the May 19, 1986 hearing,
particularly the refusal to recognize the Sloans alleged right to immediately
terminate the Lease-Purchase Agreement and permitting the trustee and Shamrock to conduct
exploration on the Sloan properties.

These motions were overruled by the courts Findings of Fact and Judgment
entered on June 11, 1986, and by an order on July 3, 1986.

On June 16, 1986 the trustee requested and, over the objection of the Sloans, was
granted the temporary restraining order which restrained the Sloans from proceeding
further with the action they had filed in the Clinton Circuit Court in which they had
sought a temporary restraining order restraining Shamrock from entering on their property
and exploring for coal.

On June 18, this court entered preliminary injunction restraining the Sloans from
further proceedings in the action in the Clinton Circuit Court and enjoining the Sloans
and their attorneys, not only from proceeding in the action in the Clinton Circuit Court,
but also in any other action in any Kentucky court to enjoin or otherwise interfere
with the use of the property by the Trustee and Shamrock Coal Company or in any other
manner attempting to interfere with or defeat the exploration of such property under the
terms of the orders of this court.

On June 18, 1986, the Sloans, by counsel, filed motions to dissolve the temporary
restraining order or other injunctions entered by this court.The Sloans reasserted a familiar allegation
appearing in their prior motions which had been overruled by this court, that the Sixth
Circuit had refused to award the trustee any interest in the coal or surface rights held
by the Sloans, and had relegated the trustee to the position of having to assume or reject
the Lease-Purchase Agreement of January 22, 1970 between the Sloans and Becknell &
Crace; that the bankruptcy court has no jurisdiction over the Kentucky Department of Mines
and Minerals and therefore cannot enjoin the Sloans from proceeding in the state court to
contest the exploration permit issued by the state to Shamrock pursuant to which Shamrock
was conducting exploration on the Sloan properties, a thoroughly strange allegation in
view of the jurisdictional provisions of title 28 U.S.C. §1334(b) and (e).

On June 12, 1986 counsel for the trustee served on counsel for the Sloans and John
Sloan, pro se, a motion for a preliminary injunction enjoining the defendants Sloan from
acts, or action, directly or indirectly, to deprive the trustee of the bankruptcy
estates ownership rights to the coal properties which are the subject of the
adversary proceeding then before the court.In
support of the motion counsel for the trustee attached a copy of a letter dated May 29,
1986 from counsel for the Sloans to the debtor, counsel for the debtor, and the trustee
advising them that the Sloans had unilaterally terminated the Lease-Purchase Agreement
dated January 22, 1970 and would not permit mining operations to be carried out on said
lands unless ordered to do so by a court of competent jurisdiction; that said contract and
all mining rights of the lessee (Becknell & Crace) or any successor in interest or
assignee (Shamrock) thereunder, have been and remain terminated.

Also attached to the trustees motion for a preliminary restraining order in
support thereof is a copy of a May 26, 1986 letter from counsel for the Sloans to the
London, Kentucky Regional Office of the Kentucky Department of Mining Reclamation and
Enforcement protesting the issuance of a permit to Shamrock for exploration for coal on
the Sloan properties.The letter asserts that
entry by the permittee on the Sloans land, without their permission, amounts
to trespass under law and will not be tolerated.The
letter was accompanied by an affidavit of two members of the Sloan family stating that
[n]o recorded title of any kind, lease or otherwise, has ever been filed in the name
of Becknell and Crace Coal Company and no deed of any kind for such land (the Sloan
properties) was ever given to said Becknell and Crace Coal Company, Inc.Both the letter and the affidavit requested the
department to revoke the exploration permit issued to Shamrock.

The responsive letter of the department, also attached to the trustees
motion, advised counsel for the Sloans that the department does not have the authority to
enforce the trespassing laws; that the question of whether Shamrock has the legal right of
entry on the area of exploration is a civil matter to be pursued in the civil court
system.

The assertions in those letters, after the issue of ownership of the coal had been
decided by the Sixth Circuit, and after the orders entered by this court conforming to the
ruling of the Sixth Circuit, are difficult to comprehend or condone.Moreover, the Sloans, by counsel, filed in their
unlawfully initiated action against Shamrock in the Jefferson Circuit Court a motion for
an injunction prohibiting Shamrock from proceeding in this present adversary proceeding in
the bankruptcy court, an additional clear violation of this court's Order of June 18,
1986.

The conduct of the Sloans and their counsel in disregarding the rulings of the
Bankruptcy Court, the District Court and the Court of Appeals in this matter could hardly
be more blatant.On these facts, the court is
of the opinion that the Sloans and their counsel should be jointly and severally held
responsible for reimbursing Shamrock for attorney fees and costs as requested in the
amount of $74,274.00. This amount does not take into account the rogue actions initiated
by the Sloans in the Clinton Circuit Court against the Neals and the Vititoes or the
effrontery of their counsels correspondence with the London Regional Office of the
Kentucky Department of Mining Reclamation and Enforcement.In addition counsel for the Sloans shall, as an additional sanction, pay into the
registry of the court the sum of $74,274.00.

In the event it should be argued or determined the bankruptcy court is somehow
limited in the imposition of sanctions under Rule 9011 of the Federal Rules of Bankruptcy
Procedure, then the findings herein are submitted as recommended findings and sanctions.

Dated:

By the court


________________________________JOE LEE, U.S. BANKRUPTCY JUDGE

Copies to:

John T. Hamilton, Esq.

Douglas G. Sharp, Esq.

John T. Ballantine, Esq.

Charles C. Adams, Esq.

Ruben G. Hicks, Esq.

Kevin G. Henry, Esq.

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

LONDON

IN RE:

BECKNELL & CRACE COAL CO.CASE NO. 72-60650

DEBTOR

SHAMROCK COAL COMPANY, INC.PLAINTIFF

V.ADVERSARY NO. 95-6026

LOLA BETTYE SLOAN; JIMMIE
SLOAN;

TONY SLOAN; NED T. SLOAN;

MARGARET SLOAN; BRUCE R.
SLOAN;

JOHN SLOAN; RUBEN G. HICKS,
TRUSTEEDEFENDANTS

ORDER

In conformity with the memorandum opinion of the court this day entered, IT IS
ORDERED AND ADJUDGED as follows:

1.The motion of the defendants Sloan,
by counsel, to alter, amend and vacate the findings of fact and conclusions of law as set
out in the courts memorandum opinion of September 12, 1996, and to amend and vacate
the courts order of September 12, 1996, implementing the opinion should be and
hereby is overruled.

2.The motion of Shamrock Coal
Company, Inc. for an order requiring the defendants Sloan and counsel for the Sloans to
reimburse Shamrock for attorney fees and costs incurred in defending state court and
district court actions initiated by the Sloans and their counsel in disregard of orders of
this court as set out in the courts memorandum opinion and in disregard of the
Option to Lease Agreement and Coal Lease entered into between Shamrock and the chapter 7
trustee with approval of this court, is sustained.

Shamrock Coal Company, Inc. is entitled to judgment in the amount of $74,274.00
jointly and severally against each of the defendants Sloan, against Douglas G. Sharp,
individually, and against the law firm of Morgan & Pottinger, plus interest at the
applicable rate specified by 28 U.S.C. § 1961 until paid.IT IS FURTHER ORDERED that the law firm of Morgan & Pottinger shall pay an
additional $74,274.00 into the registry of the court as a sanction for the firms
blatant disregard of orders of this court, the district court, and the court of appeals in
this case.

Counsel for Shamrock is directed to submit a judgment on which execution may issue
in conformity with this order.

3.The trustee is directed to submit
orders setting aside any deeds or other documents he may have executed in favor of the
Sloans quit claiming the trustees interest in rights of way, realty and minerals or
equipment located on the realty, which the trustee acquired as successor in interest to
the debtor, Becknell & Crace Coal Company, Inc.The orders shall be in a form appropriate for recording in the offices of the
county clerks of the counties in which such property is located.

This is a final and appealable order.

Dated:

By the court -

_______________________________JOE LEE, U.S. BANKRUPTCY JUDGE

Copies to:

John T. Hamilton, Esq.

Douglas G. Sharp, Esq.

John T. Ballantine, Esq.

Charles C. Adams, Esq.

Ruben G. Hicks, Esq.

Kevin G. Henry, Esq.

[1]The transformation of the office and
title of referee in bankruptcy to that of bankruptcy judge dates back to April 24, 1973 on
which date the U.S. Supreme Court promulgated Rules of Bankruptcy Procedure.See93A
S.Ct. 3081 (1973).These proposed rules were
reported to Congress on May 1, 1973, were approved by Congress, and took effect October 1,
1973.

The
rules were the product of nearly 8 years of study which commenced shortly after enactment
of Pub.L. 88-633, § 1, 78 Stat. 1001, on October 3, 1964.This statute added to the Judicial Code § 2075, 28 U.S.C. § 2075, which empowered
the Supreme Court to prescribe rules of practice and procedure under the Bankruptcy Act.

As
originally enacted § 2075 provided that after such rules have taken effect, all laws in
conflict with such rules shall be of no further force and effect.Section 2075 also provided that such rules shall
not abridge, enlarge or modify any substantive right.

Rules 901 and 902, which took effect October 1, 1973, provided "bankruptcy
judge" means the referee of the court of bankruptcy in which a case is pending, or
the district judge when issuing an injunction under § 2a(15) of the Act and when acting
in lieu of a referee under § 43c of the Act or under Rule 102 (after withdrawal of a
case).Thus, Bankruptcy Act cases and
controversies were being administered and adjudicated by "bankruptcy judges"
several years prior to enactment of the Bankruptcy Reform Act of 1978, which took effect
October 1, 1979.

Apparently, the Committee on Bankruptcy Rules, the Committee on Rules of Practice
and Procedure, the Judicial Conference of the United States, the U.S. Supreme Court, and
Congress, through all of which the bankruptcy rules were vested, did not perceive the
designation of "referees" as "bankruptcy judges" as effectuating a
change in substantive law or as cause for confusion of courts, litigants, or bankruptcy
practitioners.

Since these rules took effect on October 1, 1973, orders and opinions in the
Becknell & Crace Coal Company, Inc. case and related adversary proceedings have been
entered by the undersigned as "bankruptcy judge," as directed by the Official
Forms accompanying these 1973 rules.See 93A
S.Ct. pgs. 3174-3210.Heretofore, the Sloans
and their counsel have not indicated this practice confused them.

The Bankruptcy Reform Act of 1978 continued sitting bankruptcy judges in office
until March 31, 1984, conferred on them the title United States Bankruptcy Judge, and
vested them with authority to administer pending and new cases commenced under the
Bankruptcy Act until the Bankruptcy Code took effect on October 1, 1979.See Title IV-Transition, §§401, 402, 403, 404 and 405 of Pub.L. 95-598.

On June 28, 1982, the U.S. Supreme Court declared unconstitutional title 28 U.S.C.
§ 1471, as added to the Judicial Code by Title II, § 241(a) of the Bankruptcy Reform Act
of 1978, Pub.L. 95-598.Northern Pipeline Const. v. Marathon Pipe Line Co., 102
S.Ct. 2858, 458 U.S.50, 73 L.Ed. 2d 598 (1982).This
decision declaring a section of title 28, the Judicial Code, unconstitutional, did not
affect the substantive provisions of title 11, the Bankruptcy Code, and did not affect the
transition provisions appearing in Title IV of Pub.L. 95-595, except perhaps § 405(2),
which enlarged the jurisdiction of the bankruptcy courts during transition.The popular misconception that the Supreme Court
declared the "bankruptcy law" unconstitutional is just that, a misconception.

On July 10, 1984, Congress enacted present chapter 6 of title 28 of the United
States Code providing for the creation and composition of the bankruptcy courts, the
appointment of bankruptcy judges, and for continuation of sitting bankruptcy judges in
office until September 30, 1986.See Pub.L.
98-353, Title I § 104(a), July 10, 1984.

Present title 28 U.S.C. § 157 authorizes reference of all bankruptcy cases and
proceedings arising under title 11 to bankruptcy judges of the district.Sec. 115 of Pub.L. 98-353 makes clear this
includes Bankruptcy Act cases.

In conformity with the foregoing statutory scheme, Rule 83.12 of the Joint Local
Rules of the United States District Courts for the Eastern and Western Districts of
Kentucky provides for reference of Bankruptcy Act as well as Bankruptcy Code cases to
bankruptcy judges.

Obviously, Bankruptcy Act cases are now by law administered by bankruptcy judges.

[2]
See Opinion and Order of Judge Siler entered March 15, 1988, in Civil Action No. 86-227,
U.S. District Court, E.D. Ky., London Division.Prior
to the foregoing ruling, the Sloans had in December of 1987 filed in the U.S. District
Court, London Division, a motion asking the court to withdraw the reference in thisbankruptcy case.At the conclusion of a hearing held December 18, 1987, Judge Siler overruled the
motion.